Europe is one of the world’s largest apparel markets, with an enormous appetite for new clothes. In 2024, the EU imported clothing worth approximately €180.5 billion, equivalent to 29.3 billion units, according to Eurostat and CBI market data. Between 2019 and 2024, imports grew at an average annual rate of around 3.9%.
This demand is overwhelmingly supplied from outside the region. China, Bangladesh, and Türkiye remain the largest sourcing countries, with additional volumes coming from Vietnam, India, and Pakistan. At the same time, Germany (€39.1 billion), France (€23.2 billion), and Spain (€19.6 billion) rank among the largest import markets in Europe (Eurostat, 2025).
A Sector Under Pressure Despite Stable Demand
Despite strong import volumes, Europe’s domestic textile and clothing industry is under sustained pressure. Europe has become a consumption and distribution hub, with production largely externalised.
According to EURATEX, the sector recorded its third consecutive year of decline in 2025, with clothing production falling by 4.5% year-on-year. Employment has also decreased significantly, with the workforce shrinking by up to 16% compared to pre-pandemic levels.
As Mario Jorge Machado, President of EURATEX, stated:
“Every week, textile companies are closing. Production moves elsewhere, dependency increases, and the carbon footprint grows.”
Multiple structural pressures persist: high energy costs, regulatory complexity, and intensified competition from low-cost imports. Demand remains relatively stable in volume terms, but weaker in value terms, reflecting reduced discretionary spending on apparel.
Retail Footprint: Fewer Stores, Higher Stakes
This structural shift is also visible in physical retail.
Between 2014 and 2021, the number of clothing stores in the EU declined by 13.8%, with France alone seeing a reduction of 17.9%. The trend has continued post-pandemic, with significant additional closures.
In France, more than 1,450 fashion stores closed between 2020 and 2023, resulting in over 7,700 job losses (industry studies on fast fashion’s impact).
This does not necessarily reflect declining consumption. Instead, it reflects a shift in distribution, driven by growing e-commerce penetration, rising operating costs, and changing consumer behavior.
Brands are responding by consolidating their networks and focusing on fewer, higher-performing stores—often in flagship formats.
Hybrid Distribution Strategies
At the same time, brands and manufacturers are adapting their distribution strategies. Traditional wholesale models are increasingly complemented by direct-to-consumer (DTC) channels, resulting in hybrid structures that combine control with market reach.
Observed market shifts include:
- shorter ordering cycles
- more tightly curated collections
- increased use of digital tools and AI
As reported by Fashion Network, based on JOOR data:
“The wholesale channel is not disappearing, but evolving — towards shorter lead times, tighter collections and more selective partnerships.”
This reflects a broader shift toward inventory efficiency, data-driven decision-making, and controlled distribution.
Less Space, Different Function
The impact on physical retail goes beyond a reduction in square meters. The role of the store itself is also changing. But fashion remains deeply embedded in the structure of retail real estate.
Despite ongoing consolidation, fashion continues to dominate leasing activity across Europe. According to Cushman & Wakefield, the sector accounted for 37% of all leased retail floorspace in H1 2025, making it by far the largest category. (see chart)
In terms of deal activity, fashion brands were responsible for over one-third of all transactions, with players such as Mango, Zara, Massimo Dutti, and Jack & Jones among the most active occupiers.
As João Esteves, Head of Retail Agency Cushman & Wakefield Portugal, noted:
“Strategic property selection is becoming increasingly critical, with competition for prime locations intensifying.”
This underlines a central contradiction: while the fashion sector is reducing its overall footprint, it still acts as a primary driver of retail demand and leasing dynamics.
At the same time, the nature of that demand is shifting.
With inventory increasingly managed through centralised logistics and online platforms, stores are becoming less about stockholding and more about brand presentation, experience, and service. This is particularly evident in the growing importance of flagship locations and high-performing assets. AAs a result, physical stores increasingly function as:
- brand showcases
- customer experience hubs
- omnichannel service points (click & collect, returns)
This suggests that fashion’s role in retail real estate is not disappearing—but becoming more strategic, concentrated, and performance-driven.
Tourism is also playing a role. Strong international travel flows are supporting demand in key retail destinations, particularly for premium and luxury brands. In fact, luxury lettings increased by more than 50% year-on-year in the first half of 2025, with notable activity in markets such as Italy and the UK.
Still, the broader direction remains unchanged: fewer stores, higher expectations.
Implications for Retail Real Estate
For the retail real estate sector, these developments are already reshaping demand patterns.
Fashion tenants, traditionally one of the largest occupiers of retail space, are reducing their footprint and are likely to continue doing so. Demand is not disappearing, but it is becoming more selective and performance-driven.
Several implications are emerging:
- Polarisation of locations: Prime assets continue to attract flagship stores, while secondary locations face increasing pressure.
- Higher productivity requirements: With fewer stores, retailers are prioritising locations that deliver strong sales densities.
- Changing tenant mix: Food & beverage, leisure, and service concepts are expanding to compensate for reduced fashion presence.
- Greater leasing flexibility: Turnover-based rents and shorter lease structures are becoming more common.
In parallel, the decline of mid-market apparel, historically a key anchor for many shopping centers, is creating structural gaps that need to be filled by new concepts and uses.
A Smaller Footprint in a Large Market
All these developments point to a structural recalibration of the European fashion sector. The market itself remains large, with sustained demand supported by global supply chains. But the way this demand is served is changing fundamentally.
Distribution is becoming more selective, the regional production base continues to shrink, and the number of physical stores is likely to decline further.
Wholesale’s evolution is one element of this broader shift, reflecting a move toward more controlled and efficient distribution. But the more significant story lies in the overall reduction and redefinition of physical retail space.
For retail real estate, this suggests a clear direction: fashion will remain an important category, but it will occupy less space, operate more selectively, and fulfil a different role within retail destinations.
Or, put more simply: The scale of the market remains. But its physical footprint does not.
